Back to top

Image: Bigstock

BP Reinitiates $5.7 Billion Quad 204 Project at Offshore UK

Read MoreHide Full Article

BP plc (BP - Free Report) on behalf of its co-venturers – Royal Dutch Shell plc and Siccar Point Energy – announced the restart of operations of the Quad 204 project in the redeveloped Schiehallion Area, west of Shetland region, offshore U.K. The reinitiation of operations will help to resume production that was stopped in 2013 and help the company to double its output in the area by the end of the decade.

The Quad 204 project represents the third of the seven new upstream major projects anticipated to be brought online in 2017. The projects commissioned earlier include the Trinidad onshore compression project and the Taurus/Libra development of the West Nile Delta project in Egypt. New projects commissioned through 2016 and 2017 are estimated to provide 500,000 barrels of oil equivalent per day (boe/d) by the end of this year. With further projects starting production through to the end of the decade, BP anticipates about 800,000 boe/d production from new projects by 2020.

BP and its partners had estimated the cost for the Quad 204 project at 4.4 billion pounds ($5.7 billion). The cost included construction of a new floating production and supply offloading (FPSO) vessel, the ‘Glen Lyon’, along with redevelopment of the mature Schiehallion and Loyal fields. In 2017, BP expects output from Quad 204 to grow to 130,000 barrels of oil per day and estimates the output to nearly double to 200,000 boe/d by 2020.

The first development of the Schiehallion and the adjacent Loyal fields began in the mid-1990s. Since the commencement of production in 1998, the fields have produced about 400 million barrels of oil. Further, around 450 million barrels of resources are expected to be unlocked from the fields through the redevelopment of the Quad 204 project. This in turn will  extend the life of the fields out to 2035 and beyond.

Production from the new Clair Ridge major project is anticipated in 2017. Over the next 18 months, BP plans to participate in about five exploration wells in the UK, in addition to drilling about 50 development wells over the next 3–4 years.

Since the sanction of the Quad 204 project in 2011, UK companies have received over £2 billion of contracts.

The redevelopment of the Quad 204 project will boost BP’s North Sea business. Additionally, BP is likely to gain from the increased production and cash flows from the steady commissioning of major projects over the coming years.

Investors’ confidence on BP’s stock is reflected in its price chart. Shares of the company have rallied 10.3% in the last three months, while the Oil & Gas – International Integrated industry gained 2.6%.

BP currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks from the same space include SunCoke Energy, Inc. (SXC - Free Report) and Canadian Natural Resources Limited Ltd. (CNQ - Free Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SunCoke Energy posted a positive earnings surprise of 120.0% in the preceding quarter. The company beat estimates in two of the four trailing quarters with an average negative earnings surprise of 35.78%.

Canadian Natural Resources posted a positive earnings surprise of 30.77% in the preceding quarter. It surpassed estimates in two of the four trailing quarters with an average negative earnings surprise of 275.46%.

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

BP p.l.c. (BP) - free report >>

Canadian Natural Resources Limited (CNQ) - free report >>

SunCoke Energy, Inc. (SXC) - free report >>

Published in